It was easy money -- too easy, the prison inmate told a Congressional Subcommittee on Oversight back on June 29, 2005.
"I had no tax experience or nothing but it was the easiest thing I've ever learned to do."
The man was only identified as Inmate John Doe. He was asked to testify after a FOX 13 investigation helped shine a light on a multi-million dollar scam.
Inmates were filing fake tax returns while behind bars and getting real returns in a series of reports we aired in the summer 2005. 1040EZ forms were easy money in Florida and around the country.
Jim Davis was a Tampa congressmen at the time and helped organize the hearing after we showed him the fraud.
"It's a disappointment that we are still talking about this problem," Davis said recently. The attempted reforms over the past eight years did not stop the problem -- just ask "Inmate Doe" who is now out of prison and speaking out.
"It was just free money," says Dwayne Selvey, who is now living in South Carolina. He was known to fellow inmates as "The Tax Man." He did time for burglary and says he got the idea while watching TV in the early 90s.
"I filed one for myself and nine others which was ten all together and all of them came through. Mine was like $3,700 dollars," says Selvey. It was the beginning of a very long lucrative career as a jailbird tax accountant.
"The first year I bought shoes, a color TV, a boom box and lots and lots of drugs," he said.
Selvey recruited clients and trained other cons and says he cheated the federal government out of $4 million. He got careless, eventually got caught, and got another five years in prison. Authorities asked him to tell his story on Capitol Hill and he agreed.
Selvey says there was no follow-up with him after the hearing and records show the scam continued to grow. In fact, over the past decade records kept by the Treasury Inspector General for Tax Administration show tax refund fraud among the prison population has grown more than 1000 percent nationwide. The IRS says it flagged 276,000 questionable returns filed by inmates in 2012 totaling $1.7 billion.
LINK: IRS examples of questionable returns in 2013
So how much slipped though? That number is estimated at more than $100 million, a figure J. Russell George, the Treasury Inspector General for Tax Administration, calls totally unacceptable.
Politicians and bureaucrats trying to end the fraud acknowledge the hearing back in 2005 was perhaps a missed opportunity.
"The key is the follow-up, because if you don't stay on these agencies, they move on to the next crisis or issue they are facing," Davis says.
He thinks perhaps the 1040EZ is just a bit too easy to fill out and the IRS needs to make changes.
"It may make it harder for me as a taxpayer to apply for a refund, but that's a small price to pay if it makes it almost impossible for some criminal to get a refund."
Dwayne Selvey says he knows several ways to prevent fraud, but since he's no longer serving time and needs a job, he'd like to be hired as a paid consultant. Regardless, if the government takes him up on his offer, Selvey says he's been reformed and has no plans to go after the so-called free money.
"I could jump out and get a couple million dollars in a month or two, but I'm not going to do it because it's wrong."
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